Tuesday, October 26, 2010

No money in it

Okay, so this is basically a cheesy repost post, but on those terms it's good. This Gin and Tacos piece on the current fetish for budget-balancing gets at some excellent points.

What changes? What gets better? No one has been willing or able to explain what the benefits of "lower spending" will be, either in the real-world or abstract economics textbook sense. The Ron Johnsons of the world can't explain how their magical remedy will reduce unemployment. I mean, are there businesses in the U.S. right now that aren't able to hire because the Federal government spends too much money, especially bearing in mind that a vast portion of the private sector depends on government contracts? How will the balanced budget make up for, let alone stimulate, the drop in consumer demand that will result from kicking millions of people off of their current benefits (which would presumably be necessary) such as unemployment compensation, Social Security, and so on?

Stumping politicians like to point out that families have to draw up their budgets on the basis of money they have. True... ish. It doesn't take into account the role of credit that's become crucial in the age of stagnant or shrinking wages. And it really doesn't explain why it's better for family budgets to get even tighter. A big reason why the recovery has been so desperately slow to get here is the lack of money in the hands of those most likely to spend it.


susan said...

Yes, instead the money has been put directly into the pockets of those power mad narcissists who don't believe there's anyone on the earth but them. Loathsome hypocrites.

Ben said...

Oh yeah, if I get started on unearned wealth and how we're all supposed to tiptoe around it, I'll melt into the keyboard.